AMJ Financial Blog

The Markets- September 3, 2013

Posted on: September 4, 2013

Last week was crunch time in the National Football League (NFL). With the 2013 regular season approaching rapidly, NFL teams cut about 700 players from their rosters over the Labor Day weekend. That was a big cut—about a 40 percent drop in player employment—as rosters were pared from 90 to 53 players. However, it’s not likely to have a significant effect on U.S. unemployment data—and that’s really what the week ahead is all about.

Last week, markets jittered and slumped on news that Syria was thought to have used chemical weapons against civilians. According to The New York Times, 70 percent of stocks that trade on the New York Stock Exchange finished Friday lower, and 73 percent of those listed on the NASDAQ lost value.

There were signs of renewed optimism on Labor Day. Although U.S. markets were closed, world markets responded well to news that there would be no immediate American military action against Syria. Encouraging economic data from China and Europe helped share prices, too, although it didn’t do much for government bonds, gold, or the Japanese yen.

Post Labor Day, investors will be anticipating employment data with the zeal of Green Bay Packer fans decked out in foam cheeseheads awaiting the opening kickoff at Lambeau field. The Financial Times, a British publication that has little interest in American football but great interest in U.S. Federal Reserve policy, put it this way:

“Members of the U.S. Federal Reserve open market committee will get their last pieces of information about the labor market before their all-important September meeting, which has been heavily trailed as posing the first real opportunity for the Fed to embark on a taper… The US economy has been recovering at a painfully slow but steady rate for more than two years now and with no sign of any step-up in the pace of improvement, the Fed policy-makers face a finely balanced decision.”

No matter what happens, emotions are likely to be running high this week.

Data as of 8/30/13

1-Week

Y-T-D

1-Year

3-Year

5-Year

10-Year

Standard & Poor’s 500 (Domestic Stocks)

-1.8%

14.5%

16.7%

15.9%

5.0%

4.8%

10-year Treasury Note (Yield Only)

2.8

NA

1.6

2.6

3.8

4.6

Gold (per ounce)

1.3

-17.7

-16.0

3.9

11.2

14.0

DJ-UBS Commodity Index

0.2

-6.2

-10.1

-0.4

-6.6

0.9

DJ Equity All REIT TR Index

-1.9

-0.6

1.4

13.1

4.9

9.5

Notes: S&P 500, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

SOBERING STATISTICS AND INVESTMENT IDEAS SOMETIMES go hand-in-hand. When one of America’s favorite fast food chains unveiled a new product in Japan, some people wondered how long it would be before this fine innovation — a three-quarter pound, 1100 plus calorie serving of potatoes called Mega Fries— would reach our hungry shores. Others deliberated on the ways in which higher consumption of nutritionally deficient foods may affect obesity rates and illness in countries around the world. They may even have done a Google search to ascertain which companies are working on cures for diabetes, developing treatments for heart ailments, or bio-engineering organ replacements.

A key measurement in evaluating the ill effects of diseases and health conditions is the Disability-Adjusted Life Year or DALY. According to the World Health Organization:

“One DALY can be thought of as one lost year of “healthy” life. The sum of these DALYs across the population, or the burden of disease, can be thought of as a measurement of the gap between current health status and an ideal health situation where the entire population lives to an advanced age, free of disease and disability…DALYs for a disease or health condition are calculated as the sum of the Years of Life Lost (YLL) due to premature mortality in the population and the Years Lost due to Disability (YLD) for people living with the health condition or its consequences…”

It’s depressing to note that mental disorders and drug and alcohol abuse are the biggest drivers of disability. They account for more than 7 percent of DALYs. That’s more than diabetes, HIV, or tuberculosis, and almost as many as cancer. Globally, in 2010, depression and anxiety were responsible for about 11 million lost years of healthy life in the 20- to 24-year-old age group. Drug use also appears to peak at about this age. The number of DALYs for depression and anxiety appears to decline with age.

Perhaps the best idea is corporate wellness programs. Research published by HarvardUniversity in 2010, found that medical costs declined by about $3.27 for every dollar spent on wellness programs. In addition, the cost of absentee days decreased by about $2.73 for every dollar spent.

Weekly Focus – Think About It

“When you are offended at any man’s fault, turn to yourself and study your own failings. Then you will forget your anger.”